Report: DVR could turn Apple TV into multi-billion dollar business

By integrating digital video recording (DVR) features into Apple TV, Apple stands to transform its niche media hub business into a serious growth driver worth over a billion dollars annually, according to one Wall Street analyst.

Reacting to a patent filing uncovered by AppleInsider on Thursday, American Technology Research analyst Shaw Wu said he sees DVR features like those portrayed in the filing cropping up in a third or fourth revision to Apple TV, turning the device into a real business rather than just a "hobby."

"We estimate AppleTV to be a very minor contributor today at ~0.3-0.4 percent of revenue or $100-125 million annually," he wrote in a note to clients. "We believe adding the ability to watch and record live TV could turn this into a billion dollar, if not multi-billion dollar business."

Wu said the cost of hardware components needed to equip the media box with DVR features is almost negligible, or about $12-15 in incremental cost per unit.

"We (as well as many others) have been clamoring for DVR and/or TV tuner capabilities since the introduction of Apple TV 1.0 in January 2007 and even Apple TV 2.0 with movie rentals in January 2008," he added. "We are pleased to see Apple listening to customers similar to what it has done with iPhone, with adding native access to Exchange server."

The analyst, however, took pause in his report to note that there have been patent filings from Apple in the past that have not come to fruition "yet." One example, he said, is Bluetooth stereo headsets which have yet to ship but "will at some point as cost of components decline."

Separately, he cited his own sources as saying that Apple and Sony appear to be in the final negotiation stages of bringing Blu-ray to Macs.

"Thus while near-term trends look difficult with a looming recession and a slow-down in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals," he wrote. "[We] reiterate [our] BUY rating and price target of $175."

I voted "I'd likely purchased" but I really want more information. If Apple goes this route (make AppleTV a DVR), then Apple should buy Tivo. Have two media client set-top boxes: a low-end basic AppleTV non-DVR set top box (something that cost less than $179) and an Apple Tivo product (mid tier and high end).

I voted "I'd likely purchased" but I really want more information. If Apple goes this route (make AppleTV a DVR), then Apple should buy Tivo. Have two media client set-top boxes: a low-end basic AppleTV non-DVR set top box (something that cost less than $179) and an Apple Tivo product (mid tier and high end).

I also see Apple partnering with Cisco in this realm.

Agreed. TiVo is best-of-breed here, widely recognized as the best user experience, and have already explored all kinds of partnerships and technological directions. With the cash on which Apple is sitting, to go the DVR route alone would probably just lead to continued stagnation for the AppleTV product line.

TiVo's market cap is less than 850M. Apple could buy it with chump change.

I really hope Apple will take this analyst's advice. It is too great of an opportunity to pass up and will definitely give Apple another piece of the consumer market share. It would also be great if that thing had a super drive in it - or maybe even a Blu-Ray drive.

Agreed. Make this another mostly soft update with perhaps the need of a small add-on via one of the rear ports. There may be some additional cost to existing ?TV owners, but I'm sure most will pay for the added value.

I'll believe this when I see it. It's hard to believe Apple would have launched this product in the first place without that feature. I don't see Hollywood greenlighting Apple the rights to record their content. But it would be great.